Longtime Co-Manager Samantha McLemore Reveals Contrarian Stock Picks, Including Delta Air Lines and OneMain Holdings

Samantha McLemore’s Approach to Investing in the Most Hated Stocks

The Undervalued Potential of Delta Air Lines

Delta Air Lines is a stock she likes right now and she suspected that it could come as a surprise for many. The airline industry has been unpopular for decades for its high financial leverage and supply-demand imbalance, which could be viewed as a recipe for serial bankruptcies, she said. However, McLemore believes that Delta differentiates itself from the rest by being a premium brand and it generates revenue from stable sources like loyalty programs. The stock is looking particularly attractive now after the pandemic shock took down valuations drastically. DAL 5Y mountain Delta “I think now you’re getting another chance here,” McLemore said. “It’s generating a lot of free cash flow which we expect that even in a recession…over 60% of the business by next year will be premium and non-ticket revenue.” Delta is up 30% this year after falling 16% in 2022. McLemore said the stock can “easily” rally 50% to hit $65 apiece.

OneMain Holdings: A Hidden Gem in the Financial Sector

McLemore’s other pick is OneMain Holdings, an Evansville, IN-based lender and credit card company. Investors tend to avoid smaller-sized lenders in an economic downturn as they make less profit from credit. Sentiment towards financial stocks also seemed to sour after the recent banking crisis. The investor said she is attracted to OneMain’s 9% dividend yield and she believes that the company can sustain its earning power even through a recession. “Even in a recession, we have confidence that they can earn in the mid $4 a share,” McLemore said. “This is a great team. They have a lot of experience managing through these cycles.” McLemore said the stock is worth close to double the current price. OneMain has gained 28% this year to trade around $47 a share.

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